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INDIA : THE NEW OPPORTUNITIES

Y S RAJAN Principal Adviser, CII

[y.s.rajan@ciionline.org]

(views personal) Presented at India-Kuwait Round Table 15-16 January 2007, Manipal
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Key Features of the Indian Economy

1. Robust GDP growth 2. Manufacturing & Services are leading the way 3. Growth is Sustainable 4. Growing Externalisation of the Economy

5. India is emerging as a global manufacturing hub

6. Large Population and favorable demographics 7. High Skill-level in Labour force 8. Continuing Economic Reforms
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Large and Growing Economy

(2005-06)
GDP & Inflation
GDP

grew by 8.4% to US$ 691 bn Inflation 4.5%.

Average

Foreign Trade & Reserves

Exports Imports

grew by 25% to US$100.7 billion grew by 36% to US$140.2 billion

Forex

reserves (Aug 06) US$ 166.5 bn

Investment
The

FDI inflows grew by 37% to US $ 7.7 billion

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High Growth is Sustainable

% Growth Agriculture Industry Services GDP

2005-06 3.9 8.7 10 8.4

Q1 2006-07 3.4 10.1 10.6 8.9

2006-07 (CII Forecast) 3 8.5 9.6 8

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Composition of GDP

GDP Composition undergoing a change

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Foreign Capital Inflows ( US $ Billion)

Expanding Foreign Investment

12 10

US $ Bn

10.9 Bn $ 9.7 Bn $ 7.7 Bn $

8 6 4 2 0 -2

1993-94

1994-95

1995-96

1996-97

1997-98

1998-99

1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

FDI
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FII

2005-06

Indias FDI Abroad: Rapid Increase

US $ Billion 8 7.2 7 6 5 4 3.1 3 2.2 2 1 0 2001 2002 2003 2004 2005 Jan-Sep 2006 1.4 1.1 0.9

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NOT ENOUGH

STILL ECONOMIC GROWTH AND SOCIAL BENEFITS ARE NOT AUTOMATIC EXTRAPOLATIONS
THERE ARE MANY MICROSTRUCTURAL FACTORS NEED TO BE UNDERSTOOD
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Some Macro Statistics

PERCENTAGE SHARE OF NATIONAL S&T EXPENDITURE 2002-2003
Applied Research Experimental Dev. Basic Research Other Activities 41.7% 34.0% 17.8% 6.5%

Courtesy : R&D Statistics, DST, September 2006

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Some Macro Statistics (contd..)

National R&D Expenditure 1998 - 99 Rs.12473.17 Crores 2002 - 03 Rs.18000.16 Crores 2004 - 05 Rs.21639.58 Crores (estimate) (DST : Sept.2006) 2006 - 07 Budget estimates for major Central Govt. agencies DRDO Rs 29,600 crores
(derived by Y S Rajan)
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Some Macro Statistics (contd)

ESTIMATED STOCK OF S&T PERSONNEL
(thousands)

(DST SEPTEMBER 2006)

Stock of S&T personnel at the beginning of year Category 1991 2001 2006
Engg. Degree Holders Engg. Diploma Holders Medical Graduates Agri. Graduates 519.6 859.3 310.3 168.4 1024.4 1531.7 415.9 238.6

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Some Macro Statistics (contd..)

ESTIMATED STOCK OF S&T PERSONNEL
(thousands)

(DST SEPTEMBER 2006)

Stock of S&T personnel at the beginning of year

Category 1991 Veterinary Graduates 34.4 Science Graduates 2430.3 Science Post Graduates 482.0 2001 46.7 4024.9 805.0 2006

TOTAL

4804.3
Average Rate of Growth about 4%

9785
(projected by Y S Rajan)

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For India 2015 & Beyond

40% OF 20 MILLION VERTICAL BAR TO BE HAVING GOOD HIGHER EDUCATION BEYOND 10 + 2 REST HAVE 100% LITERACY AND MOST IMPORTANTLY CONTEMPORARY SKILLS CERTIFIED AND RESPECTED
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Higher Education Sector > 300 Universities

17,000 Colleges > 1500 Engineering Colleges > Medical Colleges > 800 MBA Colleges - Use smaller colleges TIFAC - REACH Experience Small investment - Great amplification
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NEW OPPORTUNITIES

NEW OPPORTUNITIES OPEN MANY NEW AVENUES FOR COOPERATION BETWEEN INDIA AND KUWAIT - AND MANY OTHER COUNTRIES
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 TECHNOLOGY AS BINDING FORCE IN AN INTERDEPENDANT WORLD

(see Empowering Indians by Y S Rajan Rev. 2002 Har Anand. Chapter 12 .)

KNOWLEDGE INTERMEDIATION
- KEY TO ACCELERATION DEVELOPMENT - NEEDS INTELLIGENT NETWORKING BY PEOPLE
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TERRORISM ISSUES
SUSTAINED FAST AND INCLUSIVE GROWTH, A MAJOR NEED FOR CURBING TERRORISM

NEED FOR STRONGER TIES IN TRADE, BUSINESS TECHNOLOGY, SCIENCE, EDUCATION, CULTURAL EXCHANGES, BETWEEN LIBERAL SOCIETIES
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ISSUES (contd)
DIVERSITY IS A REALITY TO BE CHERISHED NOT TO MAKE IT A DIVISIVE ISSUE IN DEALING WITH VARIOUS FORMS OF EXTREMISM
ALERT ALWAYS RUTHLESS AS NECESSARY

BUT IN THE LONG TERM, INCLUSIVE ATTITUDE SYNCRETIC & SYMBIOTIC, WILL WIN MINDS OF PEOPLE OF THE WORLD.
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Thank You

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